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Life insurance: Get extra cover with riders to basic policy

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Insurers either offer plans that come with in-built riders or the policyholder can choose the riders based on his needs.

When buying a life insurance policy, one must look at some of the important riders to get additional coverage. Riders can help policyholders to customize the policy coverage by paying an additional premium. All the riders can be attached to basic life insurance linked and non-linked policies.

Insurers either offer plans that come with in-built riders or the policyholder can choose the riders based on his needs. Some life insurers allow the policyholder to add riders to the basic policy later, as in the policy anniversary. If the policyholder does not want to continue with the rider, he can discontinue it by not paying the renewal premium of the particular rider.

Insurers can terminate a benefit rider in case the benefits are paid under the rider or due to occurrence of an insured event. Policyholders must note that a rider can only be attached if the terms and conditions of the basic policy allow for the rider. There are no restrictions on the number of riders to add to the basic cover. However, the premium on health related or critical illness riders cannot exceed 100% of the premium under the basic policy.

Opt for riders as per needs

While most policyholders opt for popular riders such as critical illness rider, permanent disability rider, waiver of premium rider and accidental death benefit rider, one must also look at riders such as guaranteed insurability riders, spouse insurance rider and major surgical assistance rider.

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Critical rider is an important rider, where the insurer will pay a lump sum or periodic payouts, over and above the sum assured, in case the policyholder is diagnosed with any of the specified critical illnesses such as heart attack, cancer, brain tumour, kidney failure, etc. After payment of the lump sum, the insurer terminates the additional rider but the basic policy will, however, continue.

In a permanent disability rider, the insurer will pay a percentage of the benefits increased every month for a specified number of years. In waiver of premium rider, if an insured person dies during the policy term, or suffers a disability and is unable to pay future premiums on the policy, the insurer will pay all premiums due. The guaranteed insurability rider allows the insured to increase the insurance cover without any additional medical examination. Experts say this rider is beneficial to young individuals who want to buy additional insurance cover as the family and income grow. The spouse insurance rider provides insurance cover for the spouse without him or her having to buy a separate insurance policy.

One can get tax benefits on premium paid for riders under Section 80C and 80D of the Income Tax Act. All rider benefits received are exempt from tax under Section 10(10D) of the Act.

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